Poverty and immigration

by Russ Roberts on September 6, 2007

in Data, Standard of Living

Robert Samuelson points out wisely that the measured poverty rate is a misleading measure of economic progress when there is immigration (a common theme here at the Cafe):

The standard story is that poverty is stuck; superficially, the
statistics support that. The poverty rate measures the share of
Americans below the official poverty line, which in 2006 was $20,614
for a four-person household. Last year, the poverty rate was 12.3
percent, down slightly from 12.6 percent in 2005 but higher than the
recent low, 11.3 percent in 2000. It was also higher than the 11.8
percent average for the 1970s. So the conventional wisdom seems amply
corroborated.

It isn’t. Look again at the numbers. In 2006, there were 36.5
million people in poverty. That’s the figure that translates into the
12.3 percent poverty rate. In 1990, the population was smaller, and
there were 33.6 million people in poverty, a rate of 13.5 percent. The
increase from 1990 to 2006 was 2.9 million people (36.5 million minus
33.6 million). Hispanics accounted for all of the gain.

Consider:
From 1990 to 2006, the number of poor Hispanics increased 3.2 million,
from 6 million to 9.2 million. Meanwhile, the number of non-Hispanic
whites in poverty fell from 16.6 million (poverty rate: 8.8 percent) in
1990 to 16 million (8.2 percent) in 2006. Among blacks, there was a
decline from 9.8 million in 1990 (poverty rate: 31.9 percent) to 9
million (24.3 percent) in 2006. White and black poverty has risen
somewhat since 2000 but is down over longer periods.

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{ 5 comments }

Rob Dawg September 6, 2007 at 11:14 am

A lot of those Hispanics in poverty are only "passing through" on their way to higher incomes.

lurker September 6, 2007 at 1:51 pm

Unfortunately, Samuelson's conclusion is that therefore we should restrict immigration, or somehow import only the people he thinks are valuable.

Russell Nelson September 7, 2007 at 12:41 am

Well, but how many of those immigrants were illegal immigrants? Why would you expect highly skilled people to immigrate illegally? Chaances are they couldn't apply their skills. No, illegal immigration doesn't stop immigration — it just guarantees that the bulk of the illegals are a bad sample size of the people who would LIKE to immigrate.

John Dewey September 7, 2007 at 7:11 am

"Well, but how many of those immigrants were illegal immigrants? "

How do we know that immigrants account for the increase in Hispanic poverty?

Poverty threshholds are very low. A single person making at least $10,488 would not be included. A family of three must have a household income below $16,079 to be included.

I'm pretty sure that most illegal immigrants are earning more than $10,000. My relative who hires illegal immigrants to build houses tells me he must pay at least $8.50 an hour for the very least-skilled workers. Those with experience earn $11-$12. They do not work 250 days a year because of weather. But they almost always work more than 40 hours weekly when they do work.

Isn't it possible that Hispanics in poverty could very well be here legally? and maybe even citizens? They could easily survive because of access to subsidies that illegal immigrants cannot obtain.

John Dewey September 7, 2007 at 10:23 am

Can we really make any sense of poverty statistics that are not adjusted for regional cost of living differences?

Populations of states with low costs of living – TX, GA, NM, NC, CO – have been growing much faster than populations of high cost states – MA, NY, NJ, CA, CT, DC. Not coincidentally, the poverty rates in most low cost states are above average. Except for NY and DC, the poverty rates for high cost states are below average.

By using a single measure of poverty for all 50 states, the Census Bureau may be distorting the true poverty picture in the U.S.

Here are links to poverty, cost, and growth data:

State poverty rates

State cost of living indices

Population change by state

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